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Hong Kong's prosperity.
The morale of the Colony had already been affected.
Mr. Sidebotham then dealt with the Constitutional Reform aspect and, after
giving the history of the various discussions between the Secretary of State, Mr. Cook and Sir A. Grantham, said that the Governor had recently agreed to
postpone action because of the unsettled Far East situation. The unofficials
might raise the constitutional question and accuse us of deliberately shelving constitutional reform (which would give them an unofficial majority) in order to force through this fresh taxation. Any proposals to increase taxation
would have to be put through in Hong Kong against the united opposition of the unofficial members, both European and Chinese, of the Legislative Council
and there would be similar opposition from public bodies.
Mr. Dugdale enquired whether the unofficial members were all business men
and if so why their interests should be allowed to over-rule those of the
poorer sections of the community who would benefit most from increased social
services and development projects.
Mr. Cook stressed that our main object was to maintain confidence in the
future of Hong Kong and he had publicly stated that we would remain in the
Colony. Anything which tended to undermine confidence was to be avoided.
The political position was so delicate that it would be unwise to upset it.
Mr. Cook considered therefore that in present circumstances in Hong Kong and
China we were bound to accept the views of the Governor as expressed in
paragraph 9 of the Hong Kong telegram No. 206. Mr. Dugdale concurred.
Mr. Palmer said that the Colony's trade was still extremely buoyant and
that the rate of taxation was very low. The Colony would require considerable
sums of money for future development and surely the time to build up this
reserve was now when the Colony could afford the taxation. The Colony did not
appear to appreciate the high level of taxation in the United Kingdom, e.g.
although H.M.G. was incurring considerable expenditure in the defence of the
Colony, Hong Kong were proposing to contribute much less towards this than
it gave last year.
Mr. Hall suggested that expenditure on the various social services,
housing, etc., was not governed entirely by the lack of money but also by
the shortage of materials, e.
.g. steel. The estimated revenue covered the
estimated expenditure and in view of the uncertain future of the Colony it
/would